US non-farm payroll: The dollar has gone through the roof

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Emma Haslett

The figure smashed expectations of 230,000 (Source: Getty)

The dollar leaped 0.34 per cent against the pound to its second-highest since October last year as US non-farm payroll figures smashed all expectations.

The dollar hit 0.6402 against the pound as official statistics from the US showed non-farm payroll - which measures the number of new jobs created - rose by 321,000 in November, against expectations of 230,000, and the biggest single-month rise since January 2012.

Unemployment rate stuck at five per cent.

The figure for October was also revised up, to 243,000 from 214,000. Private payrolls also rose, by 225,000

The figure marked the 10th consecutive time US payroll has fallen by more than 200,000 - the first time since 1995 that has happened.

William Nicholls, a dealer at London Capital Group, said not even "the most credulous of optimists would have predicted such a surprise to the upside".

Expectedly, the dollar strengthened owing to signs that the US economy is marching forward, but the conundrum is slightly different for equity markets. The reaction was inconclusive, as economic strength gives mixed signals to the future fortunes of US companies. Yes, a better employment picture has its plus points, but it also gives reason for the Federal reserve to increase interest rates sooner, and a higher cost of borrowing not only results in higher charges for payers of debt, but it makes other asset classes such as bonds more attractive. The Fed next meet on the 16/17 December, and is bound to bring some Yule-tide volatility to the markets.